Getting into unsustainable debt is frighteningly easy - a few months of irresponsible spending can land you with a debt of tens of thousands that could take years to pay back.
Most people experience problem debts at some point in their lives, and it can be difficult to get the situation back under control.
Many people borrow money without thinking about how to pay it back, so if you are in a difficult debt situation you are far from alone. But don't panic, there are a few steps you can take to make your debts sustainable. If you are still struggling there are debt charities that offer free financial advice.
1 - Consolidate and transfer your debts
Taking out yet another loan to deal with your debts might sound counter-intuitive, but by consolidating all of your debts into one lump sum and transferring them all to a single credit card or other loan may be precisely what you need, provided that you do so responsibly.
Provided that you have a reasonable credit score, you should be able to sign up for a credit card that offers 0% interest on balance transfers.
This way, you won't have to pay any interest on your debts for a period of time, provided that you pay everything off within the given timeframe.
But you will be charged a fee to do this and if you don't pay off your debts within the 0% period, the total amount you owe will increase.
2 - Cancel your credit cards
As soon as you have consolidated and transferred all of your debts onto a balance transfer credit card, it is a good idea to cancel any other credit cards that you have, provided that their balance is now at zero.
By getting rid of your credit cards, it should be easier to avoid impulse spending and borrowing more money in the future, and you'll likely save on interest fees as well.
While almost any credit card can be financially beneficial if used correctly, if used irresponsibly your debts could spiral out of control.
3 - Establish a spending plan
Having a spending plan isn't quite the same thing as budgeting, and you can usually provide yourself with a modest reward each month when you stick to the plan.
Everyone's spending plan will differ depending on their exact circumstances, but the first step in formulating a sustainable strategy is to know your disposable income that you have left over after your monthly expenses and setting some of it aside for later.
4 - Resist impulse buying
Impulse buying is the greatest enemy of anyone's personal finances. You should take impulse buying into account when formulating your saving strategy.
If you see something that you want, determine whether or not your budget allows it, and start saving as required. At the same time, avoid going to shopping centres or browsing through retail websites, and keep an eye on your urges to try to overcome them.
Most importantly, avoid buying anything on credit, even if it is interest-free for a given amount of time.
5 - Build up an emergency fund
Debt can quickly spiral out of control to the point that there's no more money available left to borrow when it comes to paying an unforeseen bill.
Whether it's an emergency repair for your home or car, a hefty parking fine or anything else, you absolutely need to have a line of credit or some money saved up to bail you out of what can quickly become a disastrous situation.
However, instead of relying on a credit card of bank account overdraft, start saving up right away in preparation for any eventuality.
6 - Seek out a debt management plan
In particularly severe cases, you may need to turn to a formal debt management plan. Debt management plans are typically negotiated by a third party such as a credit advice agency, and they serve to agree on a debt repayment plan between you (the debtor) and your creditor.
Many companies will charge a set-up fee as well as cash-handling fees whenever you make a payment, and it is critical that you understand the costs involved and make the payments in full and on time. You can only opt for a debt management plan for debts that are not secured against property.
7 - Prioritise your debts
If you have multiple debts, it is essential that you prioritize them correctly. The most important debts might not even be the biggest, but they are the ones that you'll need to pay off first.
If you don't pay off your most important debts, the consequences can be devastating, and you could lose your home, be declared bankrupt, have your utilities disconnected or worse.
Priority debts include, but are not limited to, those that are secured against your home and those related to your income tax, health insurance, child maintenance and utility bills.
8 - Clean out the attic
If you haven't given much thought to it before, you might be surprised by just how many things you have hidden away in the attic, basement or storage room that you no longer use any more.
Often a great way to make a bit of extra cash, cleaning out your home in search of things to sell is one of the first things that anyone finding themselves in a state of financial limbo should do.
Don't ignore the little things either, such as old baby clothes and toys, magazine collections or old clothes: everything mounts up. Take it all to a car boot sale or start listing things on eBay.
9 - Cut your outgoings
In most cases, just a few small changes can make a big change to your monthly outgoings.
There are many small ways to save money, but some of the most effective include turning down your thermostat, upgrading to energy-efficient light bulbs and appliances and not leaving things on standby.
Also shop around for a better deal on your utility bills, internet and phone connection and mobile service provider.
10 - Take on some extra work
Increasing your income is challenging, but could be worth looking into. Even a very modest increase in your income might help.
If doing a few extra hours in your day job isn't an option, you could consider a part-time weekend or evening job. Though this obviously isn't for everyone, but if done over a short term period it could be a quick way to pay off your debts.